This article first appeared on the WeChat public number: Snowball. The content of the article belongs to the author's personal opinion and does not represent the position of Hexun.com. Investors should act accordingly, at their own risk.
Stocks, watching snowballs is enough
Every night, Snowball gives you a closer look at the truth.
Most institutional and individual investors will find the best way to own common stock is through an index fund that charges minimal fees. (For most institutional investors and individual investors, the best way to invest is through the holding rate Low index fund) - Warren Buffett
one,
I am an iron powder for index investment, and the iron is still the iron of my heart. I know that this sentence has not finished talking a lot of people, I can't wait to pull out his shiny keyboard gun, I have to smash it for me; but let me finish the words first.
First of all, I want to say that I have no doubt that some active management combinations can spike the index for a certain period of time. For example, the entire S&P 500 has risen by a desperate 1% in 2015, but if you balance Amazon, Facebook, Google, EBay, Microsoft, Netflix, Priceline, Salesforce and Starbucks, the wonderful combination of Xiangshan Guro, Your 2015 yield is 60%. You are likely to crush the index sixty times.
But the question is, is this high level or luck? It is difficult to draw conclusions. Only a very long time can give you a more approximate approximation of the truth. For example, Buffett’s brilliant investor will be recognized by most people as a high level, although some people think that Buffett is lucky to several standards. The kind other than the difference. My only snowball Chinese dream combination has a yield of 70% from 2016 to the present, and it is said that it has beaten 94% of the snowball combination; but it must be frankly admitted that it is good luck, I happen to be the best chicken in the stock market. This combination was built when jumping; at most, plus the point of persisting in the long-term shareholding and the low turnover of the extremely low position.
So the core of the so-called active vs. passive investment debate is certainly not the possibility of an active fund to beat the index. The answer is of course possible, otherwise it will not explain the combination of a large number of out-of-earth indices on snowballs. Here is a quote from the economics bull Paul Samuelson: logic or real evidence tells us that the core of this problem (active vs. passive) is not to discuss whether a fund manager can be sustainable and repeatable. The way to beat the market average - random walks or Brownian motions can not prove or even speculate on this impossibility. The crux of the matter is that investors want to find the minority managers who can beat the market in the future, but they can't find them.
The purpose of the statement is that the core of the problem is the elusiveness of the effectiveness of the proactive strategy.
Secondly, I want to say that I am full of admiration for the active fund manager, and there is no disrespect. At least in the United States, active market participants are all human beings, and amaranth is absolutely a minority; but for this reason, it is difficult for you to beat the market, because you are actively participating in the market, and are also working with those The most sensitive, well-informed, well-informed, most agile, most educated, educated, and most profitable (programmed transaction) counterparty in the address book listed company CEO and CFO, Sitting at the same table, grab the Lanzhou biscuits in the other bowl.
Make an analogy. For example, suppose that I stole a tomb, and then mixed the stolen goods with various high imitations and fakes on the spot, and opened a tomb cultural relics fair (not to mention the problem of illegality). When you learn that there are already 10,000 of the world's top antique experts advanced to go round a round of treasure, then there is a wave of equally savvy insiders who are sweeping the second round, and at this time the third wave of amateurs invites you to go Going to the third round, can't you go? In all likelihood, you will not say it, and the beasts of these thieves have been smashed, and there is definitely no meat on the TM bone. There isn't much difference in the stock market, but most people will vow to go.
The market is completely effective? Of course not, there are a lot of pricing errors in the market; bricks will not be stupid? Of course not, the opportunities for brick houses to look around are everywhere. But do you and me, mortals, really find these opportunities and profit from them in a sustainable and repeatable way? This, I am not so confident.
two.
Many people think that the comprehensive crushing of US market index investment has only recently erupted. In the past, the market has a lot of retail investors, poor technology, poor market liquidity, and weak market price discovery. Therefore, active management can use excess environmental conditions to obtain excess. income. If you just think about it, this logic really makes people feel solid. But - as in the seventh season of "Game of Rights", Yan Xue said to the three fools: Anything in front of "but" is Xiang - but this logic and history silently handed us the cruel evidence handed down. Not consistent.
One of the earlier "active vs. passive" research I could find was from AGBecker (who was an investment bank and later acquired by Merrill Lynch), which will be from 300 large pension funds from 1962 to 1974. The equity (stock position) data was analyzed once and found that the median annual return was 7.8%, while the S&P 500 was 8.1%, indicating that at least half of the fund's equity positions did not achieve the above logic.
There have been three market cycles in the 13 years from 1962 to 1974, but whether you count one (1970-1974) or two (1966-1974) or three (1962-1974) cycles, all The result is that the median of active funds underperformed the broader market. If the S&P 500 is used as a fund, her performance continues to rank among the top 25% of the 300 equity investments, and other funds with volatility below 90%.
So in the United States, large-scale suspicion of the effectiveness of active investment began in the 1970s (Berger also launched the first index fund product for individual investors at Pioneer in the same period), researchers We finally have big data with a long enough history and enough reliability. When we do statistics, we find that the three views have been refreshed.
Although the Baiyun Cang dog has been in the sea for 50 years, although the single-day trading volume of the New York Stock Exchange has increased from 3 million shares to 2 billion to 6 billion shares in the past 50 years, although the US stock market has been trading from a retail market (amateur individual investors) 90%) grow to an institutional market (institutions and high-frequency transactions account for 98%, the most active 50 institutions account for 50%); although the number of CFA (chartered financial analysts) rose from 0 to about 140,000; but most The active funds still play the index they are facing, which has not changed for a long time.
three.
I used to be a fan of stock picking, but my knowledge structure was thoroughly baptized by the bleak reality I saw. Like you, when I switch my mind to a passive index investment, I face two huge psychological barriers.
The first major psychological barrier to index investment - the investment index is Luther and the trick, and the winner of life like me must win the stock selection. Many people may misunderstand: index funds are embarrassing, index funds are mediocre, incompetence is weakness, and not seeking progress is a compromise to reality is to surrender to the reactionaries, how can this be a positive and optimistic attitude of life for our communist successors What?
I can only say that this is human nature, although the human nature is mostly a pig teammate when you invest. Proactiveness is a kind of political correctness, positive thoughts on the right path, and positive energy on the three views. The motto of many people is to be proactive. From childhood to brain, the brainwashing education we receive is also what we want. Take the initiative, attack, struggle, study, and see the rainbow without going through the storm. If my teacher told me when I was a child, my dad said that the child was particularly passive in learning. When I went home, I had to eat a roundabout kick.
Therefore, people's common sentiments tell us that it is necessary to be proactive and make great efforts to engage in the ritual of worshiping the heavens. It is natural for us to think that investment must be proactive and passive. But, oh, when we look back at the history of investment in human society, the evidence of the iron and the iron and the iron and iron is that the investment is really not a miracle. As a shareholder of an investment listed company, you should be passive in nature; if you are really a born-minded person who can't control yourself, then you should use this power to work and even start a business – in this way In the case, you will be more likely to thank yourself for your struggle in the future.
The late University of Chicago professor James Lorie once said that choosing an index fund is not a way to accept the middle, but it is not a trick. Index investment is the right path to the world, allowing you to avoid the inhumane ending to the greatest extent possible. In fact, I don't think investment is a game of attack. On the contrary, investment may be a defensive game. In a sense, investing is a bit like playing tennis. Some people have done statistics and found that 70% of the highest level of tennis matches is due to opponents' mistakes. If you passively defend against mistakes, you may be able to win this game.
The second major psychological barrier is that the investment index is “blind†and that active management can be used to avoid investment risks. But this actually underestimates the difficulty of timing. Those who oppose index funds have a seemingly perfect eulogy: the index will also be overvalued, and index investment will force you to invest in overvalued stocks. Many people think that you can hold cash or you can hold defensive stocks or even short to hedge. This logic seems to be self-evident and correct.
To put it bluntly, there is still an unwilling and uncontrollable desire to take the initiative to attack.
The memo recently written by Howard Max clearly spells out several of his main reasons for opposing index funds.
1. Your investment index gives up the chance to beat the index. (I want to say: see the quail egg theory discussed above.)
2. The current poor performance of active funds is likely to prove to be cyclical. (I want to say: It seems that this is not the case, see the second part of this article.)
3. The liquidity of the Index ETF has not been tested by a deeper bear market. (This can't be shackled, it can only be tested by reality. The big bear market has no liquidity.)
4. There is no fund manager analysis and management in the index fund. Are you afraid of it? (I want to say: I am not too afraid from the history of the US stock index over a hundred years.)
A lot of evidence tells us to get excess returns by timing, in many cases a random event. Timing is very, very, very difficult. You must be right twice when you choose success: you have to do it once when you open a position, and you have to do it once when you open a position - not a word: you will buy what the apprentice will sell. master. You must be an apprentice and a master.
From my personal experience, judging the overall valuation of an index is not difficult. Whether through a cyclically adjusted P/E ratio or other valuation methods, you can roughly judge that the index is higher than the historical average. Estimated or underestimated. But the problem is that you have to use this information to guide you in the timing of your portfolio. This is really very difficult and difficult to get up to. Again, I know that a lot of people have been watching the US stocks since 2013 or 2014. Whether they are holding cash or shorting US stocks, they are not doing very well now.
four.
Maybe there is a third way.
Active vs. Passive, black to black, never ending, very boring, right? Many people also believe that index investment Dafa is good, but we are just like the tide of love for active investment, will it be surrounded by you and me? We just can't control these hands, right? If you think that the world is not "the opposite of the east wind or the west wind overwhelming the east wind", let me point out the possible third way - you can fly in love.
Although investing should try to avoid mental accounting, I would like to solemnly propose here, perhaps you can open the following three account types:
1. Active investment account;
2. Passive investment account;
3. Retirement account.
Then we know that for investment, you can do three things:
1. Asset allocation;
2. Securities selection;
3. Market timing.
For active investment accounts, you can forget to pick up your hands. You can engage in asset allocation, you can make high-selling and low-selling when you make a choice. You can keep picking stocks and throwing away shares. You can also concentrate on it. In short, how do you want to do it? How to engage, this is where you achieve a positive attitude towards life; of course, my advice is based on long-term shareholding, try not to all in an option swing trade or gamble from time to time, unless you have this account Can't wait to start from scratch.
For passive investment accounts, you break the idea of ​​stock picking, but you can engage in asset allocation and market timing. You can configure index funds based on stocks or bonds or real estate trusts. You can also swap in what you think. You can engage in global asset allocation by trading a low-value index and swapping out an index that you think is highly valued. To put it bluntly, this strategy is relatively compromised and not very radical, and I personally think that this account and the following retirement account can form the cornerstone of your investment wealth - but only if you want to be able to judge not only which index overestimates which index is undervalued. It is also necessary to predict the future evolution of the index in the case of overestimation or underestimation (for example, the Russian index is long-term underestimated but the TM does not rise for a long time), which is still very difficult; good words are not afraid of repetition: timing is very difficult.
For the third account, the retirement account, if you are not retireing next Friday, then you only need to manage the asset allocation – or to be more extreme, you can invest only in the US market. Sexual index, such as the S&P 500 index; because this account is the longest-term investment in terms of mission, through her, you can get the annualized return of 7% after the “inflation†that the US stock market has not taught for more than 100 years. Of course, it is not that the investment in other markets will certainly not get this return, but after all, there is no history of data in the history of the US stock market. In addition, it is recommended to choose the rule of law market, a large number of studies show that the "rule of law market" is likely to outperform in the long run.
As for the allocation of funds, you can decide for yourself. But the most difficult thing in this Shuangfei or even Sanfei strategy is that when you think that Tianda’s wealth-producing opportunities are close at hand, you have to restrain the positions in the passive and retirement accounts, and put the funds into the active account. . Believe me, there will be many, many, many, many times, you will have almost irresistible impulse to do this, you have to go all in bitcoin, you have to go all in Tesla. In the United States, there are at least 401K accounts that restrict you from doing this through tax penalties, but in the country, this is all about your self-control.
I am generally disgusted with making predictions; but if you have to take the top of the scorpion and force me to predict, I will say that in these three accounts, there are nine or nine of your second or third accounts. It will be more successful, and your first account result will be the most miserable.
Conclusion.
It is no exaggeration to say that for active funds and fund managers who rely on them, the current index fund is already a potential weapons of mass destruction; active fund managers must fight back, otherwise they will be unemployed. Perhaps in the near future, an active foundation said to another active fund: We promise not to use the index investment strategy first.
Finally, we must pay attention to those active passive index funds. I mentioned before that the financial industry is largely engaged in marketing. It is necessary to be flexible in the fund. If you take the initiative to sell it, then change your name, such as “Smart Beta Passive Investment Strategyâ€. Life insurance was first named as death insurance by a certain genius. The result was obviously that it could not be sold. Later, it changed its name and sold it. In short, be wary of selling sheep's head and selling dog meat. The fund manager is not Jiao Yulu or Mary Su will not help the grandmother cross the road. Some funds are always looking for small pigs to be slaughtered in the market.
There are a lot of big bulls for the index investment platform. The following names all think that "for most people, the investment index is more reliable":
Ben Graham, Warren Buffett, Peter Lynch, John Berg, Eugene Fama, David Svensson, Daniel Kahneman, Charles Schwab, William Sharp, Paul · Samuelson, Burton McGill, Jeremy Siegel, Harry Markowitz... This group of people from the academic world to the big cattle in the industry, can win the award Get it soft; of course, no matter what these people say, there will still be people who think they are stupid and not up; no matter how I write here, some people think that the investment index is Luther.
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